BILL NUMBER: SB 1178	CHAPTERED  09/27/99

	CHAPTER   523
	FILED WITH SECRETARY OF STATE   SEPTEMBER 27, 1999
	APPROVED BY GOVERNOR   SEPTEMBER 27, 1999
	PASSED THE SENATE   AUGUST 31, 1999
	PASSED THE ASSEMBLY   AUGUST 23, 1999
	AMENDED IN ASSEMBLY   JULY 7, 1999
	AMENDED IN SENATE   MAY 6, 1999

INTRODUCED BY   Senator Figueroa

                        FEBRUARY 26, 1999

   An act to amend Sections 21140.2, 21140.3, and 21148 of the
Business and Professions Code, relating to petroleum franchises.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1178, Figueroa.  Petroleum franchises:  franchise dealers fair
practices.
   Existing law prohibits a petroleum franchisor from requiring a
franchisee to purchase only those tires, batteries, and other
automotive accessories sold by the franchisor.
   This bill would include motor oil within that prohibition.
   Existing law provides that a violation of the franchise dealers
fair practices provisions by a franchisor's executive,
representative, or agent is subject to a civil penalty of up to
$50,000.
   This bill would increase that penalty amount to an amount of up to
$100,000.
   Existing law prohibits a franchisor from withholding consent to
sale, transfer, or assignment of the franchise unless the franchisor
demonstrates any of certain criteria.
   This bill would require the franchisor to demonstrate that
criteria in writing to the franchisee within 45 days of receiving the
application, or required paperwork, from the buyer.  It specifies as
certain additional criteria a prohibition on withholding consent to
a sale, transfer, or assignment of the franchise for the purpose of
diminishing the market value of the franchise, or a sale, transfer,
or assignment to another person because that other person is of
foreign origin or is non-English speaking as long as the prospective
franchisee is able to adequately communicate with the franchisor and
the appropriate federal, state, and local governmental agencies
concerning matters of management, operations, environmental
compliance, and public safety.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 21140.2 of the Business and Professions Code is
amended to read:
   21140.2.  From the effective date of this section it shall be
illegal for any franchisor by any action to require a franchisee to
purchase only those tires, batteries, motor oil, and other automotive
accessories sold by the franchisor.  A franchised retail gasoline
dealer may sell any tires, batteries, motor oil, and other automotive
accessories as may be available to him or her for retail sale.
  SEC. 2.  Section 21140.3 of the Business and Professions Code is
amended to read:
   21140.3.  The franchisor's executive officer, representative, or
agent of the franchisor who negotiates any contract in violation of
this chapter or who otherwise coerces a franchisee in violation of
this chapter shall be subject to a civil penalty of up to one hundred
thousand dollars ($100,000) for each offense.  That penalty,
reasonable attorney fees and costs of the suit shall be assessed and
recovered in a civil action brought by the Attorney General or by any
district attorney, county counsel, or city attorney in any court of
competent jurisdiction.  If brought by a district attorney or county
counsel, the entire amount of the penalty shall be paid to the
treasurer of the county in which the judgment was entered.  If
brought by the Attorney General, one-half of the penalty, attorney
fees, and costs of the suit shall be paid to the treasurer of the
county where the action was brought and one-half shall be paid to the
State Treasurer.  If brought by a city attorney, one-half of the
penalty, attorney fees, and costs of the suit shall be paid to the
treasurer of the county and one-half to the city.
  SEC. 3.  Section 21148 of the Business and Professions Code is
amended to read:
   21148.  (a) Notwithstanding the terms of any franchise, a
franchisor may not withhold its consent to the sale, transfer, or
assignment of the franchise by the franchisee to another person
unless the franchisor demonstrates in writing to the franchisee
within 45 days of receiving the application, or required paperwork,
from the potential buyer any of the following:
   (1) The proposed purchaser of the franchise has less business
experience and training than that normally required by the franchisor
of prospective franchisees.
   (2) The proposed purchaser of the franchise has less financial
resources than that normally required by the franchisor of
prospective franchisees.
   (3) The proposed purchaser of the franchise does not satisfy the
then-current uniformly applied requirements, if any, of the
franchisor applicable to prospective franchisees.
   (4) The proposed purchaser of the franchise operates a franchise
under an agreement with a franchisor other than the franchisor to
whom the sale, transfer, or assignment is proposed, if the
then-current uniformly applied requirements, if any, of the
franchisor precludes prospective franchisees from operating a
franchise under an agreement with another franchisor.
   (5) The franchisee has not offered in writing to sell, transfer,
or assign the franchise to the franchisor on terms and conditions
which are the same as those of the sale, transfer, or assignment of
the franchise to the proposed purchaser; and the franchisee has not
allowed the franchisor at least 30 days in which to either accept or
decline the franchisee's written offer, prior to the sale, transfer,
or assignment of the franchise to the proposed purchaser.
   (b) Notwithstanding the terms of any franchise, a franchisor may
not withhold its consent to the sale, transfer, or assignment of the
franchise by the franchisee to another person for the purposes of
diminishing the market value of the franchise.
   (c) Notwithstanding the terms of any franchise, a franchisor may
not withhold its consent to the sale, transfer, or assignment of the
franchise by the franchisee to another person because that other
person is of foreign origin or is non-English speaking as long as the
  prospective franchisee is able to adequately communicate with the
franchisor and the appropriate federal, state, and local governmental
agencies concerning matters of management, operations, environmental
compliance, and public safety.
   (d) If the franchisor consents to the sale, transfer, or
assignment of the franchise to a prospective purchaser, the
franchisor may require the franchisee to pay a transfer fee to the
franchisor, provided the amount of the fee is reasonable when
compared to the sale price of the franchise and provided the fee is
not required in an effort to frustrate the proposed sale.
